MultiMedia Intelligence Brief December 18, 2007 -- MovieBeam, a pioneer in on-demand movie services, is rumored to be shutting its doors.

MovieBeam had a very innovative and elegant delivery methodology by trickling content to dedicated set-top boxes over analog spectrum. At the end of each week, 10 new movies would be available for viewing at a fee. The box maintained a 100 movies at all time. The elegance of the solution is that it did not require large bandwidth to deliver movies, just time and non-used broadcast spectrum. The failure of the company did not come from a lack of effort. Various investors provided over $100 million over the past four years. The failure also did not come from a lack of compelling content. MovieBeam offered approximately 10 percent of its movies in native HD format. The player also features an HDMI connection that supports up-conversion from standard-definition content to high-definition output.

IP Video Is a Game Changing Event

One of the themes of Cisco's analyst conference last week is the future of the Internet is video. The future is not just in some video or just in compelling video. It is in ALL video at ANYTIME. The MovieBeam is limited to 100 movies. If it were 1000 movies, it would be irrelevant as it is still a limit. To successfully compete in the early stages of Internet video, the uniqueness of content is important. Internet video has to add value that cannot be found in an existing wall garden environment. It is about aggregating the world in to single market and aggregating the worlds content into a single library. A company that is making good moves in that direction is JumpTV. They distribute live international television and sports over the Internet, with more than 300 television channels from 75+ countries. If you are an ex-patriot working in the US from India, you can get live content from India that satisfies your need to keep up with your favorite teams or local news. The Internet allows them to aggregate micro niche markets on a city by city basis into a single, significant countrywide market.

Opportunity For Vendors to Grab the IP Brass Ring

The death of MovieBeam is in the midst of a huge market transition. Consumer electronics manufacturers have a great opportunity to leverage an internet connection to expand 1) their market into value added services and content and 2) their direct relationship with customers. TV Networks are threatened from almost every direction. Broadband/ISPs, IPTV operators, expansive cable operators, content owners themselves (studios), and retailers. Sony, Samsung, and Panasonic have a great opportunity to use their internet connected devices to do Video on demand (VoD), electronic sell through (EST), internet TV, participative TV (voting, betting,etc) and community services (myspace/ youtube, etc). Networks and studios are racing to do their own services as well. Hulu is a joint venture between Fox and NBC Universal. All the networks are putting content directly on their own website as well. In Europe, the BBC is among the most active, as is BSkyB. Infrastructure players like Cisco and Ericsson are looking to enable an intelligent network. We are not just talking about video, but also interactivity, collaboration and community.

The Future is not without Challenges

Content owners are voracious in defense of their content. Assembling a broad content set across multiple content owners is a major issue, including unique usage rights for each rights owner. So one may allow VoD, but not sell through. Another, the opposite. Some streaming, but some notâ€¦ etc. And, at different price points. Another issue is content formats. The dominant internet video media format is Flash from Adobe. Flash is pervasive, but wasnâ€™t positioned for HD video until just August of 2007. Internet video resolutions and quality are increasing as many sites are pursuing a TV strategy. However, it faces a moving target as TV is moving to HD quickly. Andâ€¦ it will just take time. Indeed, all the activity developing content & distribution of Internet-based delivery to the PC, is really just a warm up act. Call it IP Video 1.0. The real disruptive business models will come when the IP signal efficiently makes its way to the TV: IP Video 2.0. Finally, bandwidth is still a major challenge, both on the broadband internet, and the internal home network. For the WAN, best-effort streaming internet video will require QoS, from content delivery networks like Akamai and Limelight Networks. Otherwise, the video requires non-real-time reproduction, which means local storage (DVR, or embedded DVR) to cache the content. This adds latency, but eliminates dropped frames. In the house, you have to get the internet connection to the TV. With Cat-5 you have to run new wires (not consumer friendly). With wireless, you have bandwidth and QoS issues (again, DVR solves). However, high-population density in Asian apartments and home construction standards in Europe makes wireless problematic as well. Coax is great in North America, but has limited installations in Asia and Europe. Powerline Networking is emerging, but still un-proven, particularly for the high demands of real-time HD video.

Elegant Technologies Do Not Always Win

In the end, MovieBeam was a brilliant early concept that was killed by the passage of time. The coming ubiquity of content was seen by few. The moral of the story is clear. IP video is the future. A future full of opportunity, uncertainty and excitement.

Please stay tuned for MMI report on IP Enabled Consumer Electronics. The report analyzes the service providers, equipment vendors (networking and consumer electronics), service offerings and technology in the multimedia-networked home. It examines home network architectures and the trade-offs and trends for distributed intelligence and distributed storage, including the trends in home gateways, consumer electronics and home networks. The report also looks at in-home connectivity including a brief overview of each connectivity technology and a forecast of Ethernet, powerline, coax, and Wi-Fi integrated into consumer electronics.

The report concludes with an analysis of services, industry players, business models, and opportunities enabled by network-connected consumer electronics devices. Forecasts within the report include worldwide subscriber numbers for broadband, VoIP, cable TV, satellite TV, and IPTV, as well as forecasts for the associated set top boxes and network-enabled set top boxes. Forecasts are also provided for network-enabled consumer electronics including DVD players, DMAs, video game consoles, media servers, and DVRs. Segmentation of network Ethernet, Powerline, Coax, and Wi-Fi is provided, along with associated semiconductor forecasts.

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Rick Sizemore

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